Medco Layoffs Likely

Lynn, Kathleen, The Record (Bergen County, NJ)

The $29.1 billion takeover of Franklin Lakes-based Medco Health
Solutions Inc. by Express Scripts Inc. is likely to lead to job cuts
among Medco's 2,000-plus employees in Bergen County, analysts said
Monday.

"Express Scripts management will be running the combined company,
and in my opinion, there will absolutely be layoffs at Medco," said
Anthony Vendetti, an analyst who follows Express Scripts for Maxim
Group in New York. "How many, I don't know. But there's not going to
be two accounting departments, two human resources departments, two
legal departments" in the combined company.

The acquisition of Medco was announced Monday, after the Federal
Trade Commission ruled that combining the two pharmacy benefits
giants would not violate antitrust laws. The combined benefits
manager will handle nearly one of every three prescriptions written
in the United States.

The takeover "represents the next chapter of our mission to lower
costs, drive out waste in health care and improve patient health,"
said Express Scripts Chief Executive Officer George Paz in a
statement. Paz visited the former Medco headquarters in Franklin
Lakes to speak to workers Monday.

A spokesman for St. Louis-based Express Scripts said the merger's
impact on the 4,000 Medco employees in New Jersey has not been
determined. Medco is one of Bergen County's largest employers.

"We wouldn't speculate on any specific site or part of the
organization," said the Express Scripts spokesman, Brian Henry. "We
will conduct a thorough analysis of our workforce, taking into
account the needs of each business and each marketplace, to ensure
we are best positioned to serve clients' and patients' needs while
achieving a competitive cost structure."

Express Scripts said the merger is expected to save $1 billion in
one-time costs. A Wall Street analyst who spoke on background said
that to achieve that number, Express Scripts would need to make
"some major job cuts," and he predicted that many would be in New
Jersey.

"Some people are going to have to find somewhere else to work,"
said Morningstar analyst Matthew Coffina in Chicago.

Jon Green, an analyst with New York-based Murphy & Durieu,
predicted job cuts could take two or three years as Express Scripts
decides which employees to keep.

"It is somewhat of a unique industry," Green said, adding the
company doesn't want to lay off people whose skills are hard to
replace.

Medco's North Jersey employees work at the Franklin Lakes
headquarters and in rented space in Montvale, mostly in finance,
technology, sales, marketing, account management and data analysis.

The company also has also a highly automated mail-order pharmacy
that employs about 1,200 people in Willingboro.

Employees outside company headquarters declined to comment on the
merger Monday. One who did not give his name said that there was no
news yet on potential job cuts, saying, "It's a wait-and-see game. …

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